Many of society’s most significant risks now emerge from complex, interdependent systems. For example, climate change, infrastructure, housing, insurance, ecosystems, public finance, and governance increasingly interact in ways that create consequences that extend far beyond the original point of impact.

While there has been a much needed focus on the governance of systemic risk, less attention has been directed towards how we measure/assess it in order to manage it.

Traditional risk assessment methods were largely developed to evaluate direct impacts. More recent approaches have improved our ability to understand cascading consequences across interconnected systems. However, systemic risk introduces additional challenges. Uncertainty increases, interventions can create unintended consequences, and different stakeholders may legitimately disagree about which consequences matter, who bears responsibility, and what constitutes an acceptable outcome.

One of the key insights is that these disagreements cannot always be resolved with additional data. As consequences spread across sectors, organisations, and communities, different actors experience those consequences differently, operate over different timeframes, and pursue different objectives. As a result, people can examine the same evidence and reach different, yet entirely legitimate, conclusions about risk.

These issues are increasingly shaping policy discussions worldwide. For example, the European Commission’s proposed European Climate Resilience and Risk Management Integrated Framework recognises the need to understand interconnected consequences, cross-sector interactions, and the challenges of decision-making under uncertainty.

In the paper, we propose a taxonomy of risk assessment methods based on the complexity of consequences they can assess and outline a research agenda focused on consequence analysis, uncertainty, trade-offs, causal reasoning, defensibility, and communication.

Open-Access Paper: https://onlinelibrary.wiley.com/doi/10.1111/risa.70243

For those interested in the policy and practitioner implications, I’ve also written a short explainer on systemic risk, communities, and resilience planning: What Is Systemic Risk and Why Does It Matter for Communities? - Resilience Explorer